New Georgia HOA Law: Registration, Records, and Financial Compliance Under SB 406

Georgia HOA and condo associations have new financial compliance work ahead under Senate Bill 406, known as the Georgia Property Owners' Bill of Rights Act. Most provisions take effect January 1, 2027, while attorney's fee restrictions for certain collection actions apply to cases filed on or after July 1, 2026.

Registration will require a financial statement dated no more than one year before filing. Associations will also need to keep certain records for 10 years, apply owner payments in a required order, and review delinquent accounts against the new foreclosure thresholds.

Boards should use the time before January 1, 2027, to review assessments, delinquent accounts, reserve and operating balances, payment posting rules, and record retention procedures. Associations with outdated books, unclear fund balances, or delinquency reports that do not separate assessment types should work with legal counsel and a CPA who specializes in homeowner associations.

Key Takeaways

• Georgia SB 406 creates new financial compliance requirements for HOA and condo associations.
• Most provisions take effect January 1, 2027. Attorney's fee restrictions apply to certain collection actions filed on or after July 1, 2026.
• Annual registration requires a financial statement dated within the past year.
• Boards should review assessments, delinquent accounts, payment posting, fund balances, and record retention before registration is due.
• Boards should work with legal counsel on interpretation, governing documents, disputes, and collection procedures. They should work with a CPA who specializes in homeowner associations to prepare financial statements, fund balances, owner ledgers, payment posting, and record readiness.

What Changed and When It Takes Effect

Registration applies to all community associations operating in Georgia. The remaining provisions, including changes to payment priority and foreclosure thresholds, apply to homeowner associations and condominium associations formed under Articles 3 and 6 of Chapter 3 of Georgia Title 44.

Boards should use the time before January 1, 2027, to review the financial records that will support registration, owner balances, payment posting, and collection decisions.

What Registration With the Secretary of State Requires

Registration carries a $100 annual fee and expires on December 31 each year. The filing must include the association's governing documents, the names and addresses of its officers, and a financial statement dated no more than one year before the registration date.

The main accounting issue is whether the association's books are ready to support the required financial statement. If the books are outdated, bank accounts have not been reconciled, or operating and reserve balances are unclear, the financial statement may need cleanup before registration.

Early review gives the association time to correct old reconciliations, confirm fund balances, check assessment activity, address missing records, and prepare board-ready financial statements before registration begins.

New Payment Application Priority

When an owner pays, the funds must be applied in this order:

• Regular assessments
• Special assessments
• Specific assessments
• Fees and fines

Associations also cannot refuse partial payments or accelerate assessments. If an owner sends a partial payment, the association should be able to show exactly how that payment was applied and which balances remain after posting.

For many boards, the accounting issue will appear in the delinquency report. A single past-due balance may not give the board enough information. The report should separate regular assessments from special assessments, specific assessments, fees, and fines.

Georgia association boards, including those in the Gwinnett and Atlanta area, should confirm whether their owner ledgers, payment posting rules, and delinquency reports are ready before the law takes effect. Associations should also test a few owner accounts before year-end 2026. The goal is to catch posting issues before registration, collection reviews, or owner disputes create pressure.

Foreclosure Threshold and Receivables Impact

The new foreclosure threshold creates a problem most boards will not notice until they try to act on a delinquent account. Foreclosure now requires at least $4,000 in past-due regular assessments, or 12 months of regular assessments, whichever is less, with a floor of $2,000. Fines, fees, and special assessments do not count toward that number.

In practice, this means a delinquency report showing $5,000 past due may include only $1,800 in regular assessments, with the rest sitting in fines, late fees, and special assessments. That account looks collectible on the books but no longer qualifies for foreclosure. Boards working from a single past-due total will misjudge their position.

The fix is structural. Aging reports need a column for regular assessments separate from every other charge type, and the foreclosure threshold should be tracked against the regular assessment column only. Associations that have always run a single total will need their property manager or bookkeeper to reconfigure the report format before the law takes effect. Confirm collection strategy with counsel before filing.

The 10-Year Record Retention Requirement

Registered associations must retain all records related to fines, fees, liens, and foreclosures for at least 10 years. This may include owner ledgers, fine notices, lien records, collection history, payment records, board approvals, and foreclosure-related correspondence. Most Georgia HOAs currently retain financial records for three to seven years based on tax or audit guidance. The new standard sits well above those benchmarks.

Associations that cannot produce required documentation during a Secretary of State complaint investigation face an evidence gap that may affect outcomes. Boards should update retention policies, confirm where historical records are stored, and verify that management company contracts include record transfer provisions if the relationship ends.

Attorney's Fee Restrictions Effective July 1, 2026

For collection actions filed on or after July 1, 2026, an association cannot recover attorney's fees from an owner without first providing written notice, allowing a 30-day cure period, and supplying an itemized fee statement. A judge must determine the fees are reasonable before they can be awarded.

Associations currently pursuing collection should review whether their existing process meets these prerequisites. Fee recovery built into governing documents may no longer be enforceable without the procedural steps now required.

SB 406 Compliance Checklist for Georgia Associations

Work through these items before January 1, 2027:

• Current financial statement prepared, dated within the past year
• Operating and reserve fund balances reconciled and separated
• Payment posting procedures updated to follow the new priority order
• Delinquency aging reports separate regular assessments from fines and fees
• Record retention policy revised to 10 years for fines, fees, liens, and foreclosures
• Collection procedures reviewed for attorney's fee compliance
• Governing documents reviewed by counsel for conflicts with SB 406

When to Contact a CPA About SB 406 Compliance

Some compliance items require legal counsel. The financial readiness portion of SB 406 falls within the scope of accounting practice. Consider engaging a CPA when current financial statements are outdated, reserve and operating balances need reconciliation, delinquency reporting cannot separate assessments from other charges, or historical records gaps complicate the move to a 10-year retention standard.

Platinum Financial Services CPA helps Georgia HOA and condo association boards prepare financial statements, reconcile operating and reserve balances, review owner ledgers, and organize records for SB 406 readiness.

Frequently Asked Questions

Boards working through SB 406 compliance can contact Platinum Financial Services CPA to prepare financial statements, reconcile operating and reserve balances, review owner ledgers, and organize records for filing with the Secretary of State.